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Published byPercival Atkinson Modified over 9 years ago
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Georgia’s Revenue Outlook Joint Appropriations Committees January 21, 2009 Ken Heaghney Office of Planning & Budget Georgia State University – Fiscal Research Center
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Agenda FY 2009 YTD Revenue Performance Economic Outlook Revenue Estimate – Amended FY 2009 & FY 2010
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YTD DOR Revenue Growth Equals -2.7%
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Improving Performance Through November But December was Very Weak
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Individual Income Tax: YTD Growth Equals -3.0%
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Sales Tax: YTD Growth Equals -0.9%
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Corporate Income Tax: YTD Growth Equals -18.4%
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Agenda FY 2009 YTD Revenue Performance Economic Outlook Revenue Estimate – Amended FY 2009 & FY 2010
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US and Georgia are Mired in Deep Economic Recession Housing correction led to massive losses on mortgage backed securities and undermined global financial markets Unprecedented government intervention has improved conditions in financial markets but markets remain unsettled Labor markets weakened precipitously in late 2008 Consumers have pulled back sharply on spending, particularly on durables such as autos Global slowdown has harmed domestic manufacturing as exports have fallen Countervailing forces Massive liquidity injection to free up financial markets and stimulate investment and spending Massive fiscal stimulus expected early in the new administration Commodity prices, including gasoline, have plummeted reducing pressure on household budgets
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Median Home Price Down Over 23% from the Peak
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Financial Markets are Improving But Remain Stressed
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Job Markets have Plunged
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Unemployment has Risen Rapidly
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Consumer Expenditures are Growing Very Slowly
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Durables are Bearing the Brunt of the Slowdown
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Exports have Dropped as Global Economies have Slowed
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Countervailing Forces: Monetary Policy Fed Funds target rate reduced to a range of 0 to 25 basis points Created new lending facilities to provide short-term liquidity to sound financial institutions Term Auction Facility, Term Securities Lending Facility, Primary Dealer Credit Facility Currency Swap Agreements with foreign central banks Provision of credit directly to borrowers and investors in key credit markets Purchase high quality commercial paper Lend against AAA-rated asset-backed securities Purchase longer-term securities $100 billion in government sponsored entity (GSE) debt $500 billion in GSE mortgage-backed securities
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Countervailing Forces: Fiscal Stimulus Large fiscal stimulus effort expected from the new administration – press reports suggest $750+ billion spread over 2 years. Details are uncertain, speculation is that the stimulus will consist of tax cuts, aid to state & local governments, direct spending on infrastructure and other programs On a per capita basis, Georgia’s share would be on the order of $11.9 billion per year – or about 3% of Georgia’s GDP
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Countervailing Forces: Falling Commodity Prices At Current Levels, the Decrease in Gasoline Prices will Free Up about $10.7 Billion in Annual Spending Power in Georgia
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Economic Scenario 1.Recession will continue through end of fiscal year 2.Job losses will continue but should moderate and consumer expenditures will grow slowly 3.Global downturn will harm manufacturing 4.Economy should begin to recover in second half of calendar 2009 but recovery will be slow 5.Risks to the outlook are large. Policy makers continue to wrestle to calm financial markets. Size, timing and composition of fiscal stimulus is uncertain. Oil prices are very low but could spike on geopolitical concerns.
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Agenda FY 2008 YTD Revenue Performance Economic Outlook Revenue Estimate – Amended FY 2009 & FY 2010
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Amended FY 2009 Key Points 1.Revenue estimate includes $50 million from RSR 2.Revenue growth of -5.3% is required over January through June to reach revenue estimate
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FY 2010 Key Points 1.Revenue estimate includes $408 million from RSR 2.Mild economic recovery to begin in second half of 2009 is projected to add about $368 million in revenue growth 3.Health care provider fee strategy and super speeder fine add about $240.7 million to funds available
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